WHAT IS THE AVERAGE PRICE OF A HOUSE IN THE USA?
WHAT IS THE AVERAGE PRICE OF A HOUSE IN THE USA?
The question of the average price of a house in the United States is a frequent one. It interests buyers, sellers, investors, and, more generally, real estate professionals. In this article, Investir US offers an overview of the 2020 figures and a look at the factors influencing housing prices across the Atlantic.
evolution of the average price of a house in the USA in 2020
According to figures provided by the National Association of Realtors (NAR), the average price of a home in the US increased by 12% in 2020. The figures below confirm this trend:
December 31, 2019: $277,000
January 31, 2020: $268,500
February 29, 2020: $272,800
March 31, 2020: $282,600
April 30, 2020: $288,700
May 31, 2020: $286,600
June 30, 2020: $297,900
July 31, 2020: $309,500
August 31, 2020: $314,800
September 30, 2020: $316,000
October 31, 2020: $317,800
November 30, 2020: $315,500
Real estate sales are booming in the United States, both for existing and new properties. American households are taking advantage of historically low interest rates to buy, and the figures are exceeding expectations and predictions.
If we consider the month of July 2020 alone, 901,000 new homes were sold, 36% more than in July 2019! However, the trend is not uniform across the country, with sales in the central USA (Midwest) climbing more easily than in the Northeast, for example (respectively, there was an increase of 58.8% compared to a drop of 23.1%).
Buyers are favoring larger homes. The rise of teleworking is certainly correlated with this trend, although it's a little too early to declare it openly.
The key takeaways from real estate transactions and the average price of a house in the USA in 2020 can be summarized as follows:
The stock of homes for sale is low. In June 2020, for example, there were 18.2% fewer properties for sale than at the same time in 2019.
The median price of already built homes was $295,300 in June 2020
Hawaii had the highest median property value in the United States, at $646,733.
Highest median value in the continental United States: California ($579,332); lowest: West Virginia ($107,064)
Across all housing types (single-family homes, two-family homes, condominiums, etc.), the median home price was $284,600 in May 2020. It rose to $295,300 in June 2020.
Variables that influence the average price of a house in the USA
To successfully buy and sell a home, it's important to understand the factors that influence its value to avoid making mistakes.
The average price of a home in the U.S. is influenced by several variables:
The immediate environment (the neighborhood)
The location of the property
The surface area of the house and the usable space
The age and condition of the property
Improvements to be expected
The local market
Economic indicators
Interest rates
Let's take a look at these different elements, in order to examine them in more detail:
The immediate environment (the neighborhood)
One of the best indicators of a home's value is the sale price of similar properties in the same neighborhood that have recently sold (called "comps"). This is the information most real estate professionals use to estimate the value of a home for sale.
The location of the property
The quality of local schools, employment opportunities, and proximity to public transportation and shopping—all these factors directly influence the average price of a home in the U.S. and should be taken into account. When calculating a home's value, geographic location can be more important than the size and condition of the property.
The surface area of the house and the usable space
The price of a home in the United States is roughly estimated as price per square foot—the selling price divided by the home's square footage. In addition to the square footage of the property for sale, usable space is a key factor in determining its value. Garages, attics, and unfinished basements are generally not counted as "usable" square footage.
In the eyes of buyers and appraisers, bedrooms and bathrooms are widely valued. A home with more bedrooms and bathrooms generally commands a higher price. However, these trends are highly region-specific.
The age and condition of the property
Generally speaking, newer homes are valued higher. The simple fact that key components, including plumbing, electrical, roofing, and appliances, are newer means they're less likely to break down. For the buyer, this translates into financial savings. According to HomeAdvisor , the average cost to replace or install a roof in 2019 was just under $8,000.
Improvements to be expected
Updates and improvements can add value to a home. This is especially true for older homes, which may have outdated features. However, not all home improvement projects are viewed equally. The impact of a project or improvement varies depending on the market the property is in. For example, a finished basement in Portland is worth 5 times more than an identical project in Atlanta, an increase of approximately 13% in the median home value.
Certain projects, such as adding a pool or wood flooring, for example, tend to increase the price of more expensive homes. On the other hand, projects such as kitchen renovations or adding a bathroom tend to increase the price of less expensive homes.
The local market
Even if the home for sale is in excellent condition, in a great location, and has been well-maintained over time, the number of other properties for sale in the area and the number of buyers on the market can impact its value. A large number of buyers, meaning high demand, and a small number of properties for sale, is called a "seller's market." Conversely, a market with few buyers but many homes on the market is called a "buyer's market." The amount of room for maneuver varies depending on the state of the market.
Economic indicators
The broader economy often impacts a person's ability to buy or sell a home. Of course, during a down economy, the housing market can struggle. For example, if job or wage growth slows, the number of buyers declines. Therefore, it's important to stay informed about the current state of home sales and home price appreciation in an area, especially when assessing the best time to sell a property.
Interest rates
Short- and long-term interest rates influence a buyer's ability to afford a home. Rising short-term interest rates can increase interest on savings, making short-term debt more expensive. Long-
term rates are influenced by Treasury yields, investor sentiment, and inflation rates, among other factors.
As interest rates rise, fewer people can afford to buy a home, thus affecting the selling price of homes.
The Covid-19 health crisis has impacted Americans' lives, as it has the housing market. The process of viewing, evaluating, buying, and selling homes has slowed down for obvious reasons, in addition to the fears that began in March 2020. Many potential home buyers have lost their income, and the country has seen record unemployment.
Virtual tours have become more common, and real estate professionals have resorted to safer ways to complete their transactions. In fact, some homes have sold without even being shown in person. Like any economic sector, the real estate market is constantly evolving, naturally influencing the average price of a home in the U.S. To be continued...
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